GBPUSD is moving in the Box pattern and the market has rebounded from the horizontal support area of the pattern.
It is anticipated that the United Kingdom will not enter a recession this year. Despite the strain that high prices are putting on household budgets, the National Institute of Economic and Social Research predicts that the economy will continue to expand at a modest rate.
However, it cautioned that even if the UK does not officially enter a recession, at least seven million families would experience the effects of one. The projection was made before official numbers were set to be released on Friday, which would demonstrate how well the economy is performing.
When the economy has two separate sessions of tightening over the course of three months in a row, this is considered to be a recession. In most cases, this results in decreased profits for businesses, which in turn leads to the elimination of employment and decreased tax income for governments.
According to NIESR’s forecast, the economy will expand by only 0.2% this year but will increase by 1% in 2024. When compared to forecasts made by other organizations, such as the Bank of England, this one presents a somewhat brighter image.
EURGBP is moving in an Ascending channel and the market has reached the higher high area of the channel.
However, NIESR cautioned that the increasing cost of living would mean it would still feel like a recession for millions of people, notably in the North East of England as well as areas of Scotland, Wales, and Northern Ireland. The pace at which prices grow, which is known as inflation, has been having a negative impact on household budgets as the cost of both energy and food has skyrocketed.
According to NIESR, one in every four households in the United Kingdom, or approximately seven million families, will be unable to fully cover their food and energy bills during the fiscal year 2023–2024. This number is up from approximately one in every five households during the fiscal year 2022–2023.
UK Household Income
In addition, those with a middle income would see a reduction in their discretionary income of between 7% and 13%, which could amount to a loss of up to £4,000 for the current fiscal year. Because of this, fewer people will be able to retire early, and a greater proportion of employees who are now between the ages of 50 and 64 will resume their careers.
GBPJPY is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern
In light of the fact that there are currently 300,000 fewer people working than there were before the epidemic, the government has been contemplating proposals to encourage middle-aged individuals who have retired to return to the workforce in order to stimulate the economy.
UK Inflation Crisis
As a result of Western sanctions, access to Russian oil and gas supplies has become increasingly difficult, which has contributed to an increase in inflation rates during the year 2022. A number of recent increases in interest rates have been implemented by policymakers in an effort to combat rising inflation.
On January 4, the British prime minister Rishi Sunak pledged to cut headline inflation in the United Kingdom in half in order to “ease the cost of living and give people financial security.” On December 15, 2018, the Bank of England increased its key interest rate by half a percentage point, bringing it to a new level of 3.5 percent. According to Reuters, the global financial markets predict a further increase to 4% when the Federal Reserve meets on February 2 to deliberate its next monetary policy actions.
Helen Dickinson Speech
Helen Dickinson, who is the Chief Executive of the British Retail Consortium, recently gave a speech where she warned users of the upcoming indications that inflation may have reached its full potential. She states, “While there is some indication that inflation may have reached its peak, prices will remain high in the coming months.”
GBPCAD is moving in the Descending channel and the market has broken the lower high area of the channel.
“Retailers are determined to support their customers throughout this cost-of-living crisis. They are keeping the price of many essentials affordable, expanding their value ranges, raising pay for their own staff, and offering discounts for vulnerable groups.”
Jon Cunliffe Speech
Jon Cunliffe, who is the Deputy Governor of Financial Stability, recently gave a speech where he discussed the role of the Bank of England in the era of digital currency. He also discussed how it impacted the financial stability of the country. He states, “A digital pound would be a very substantial financial infrastructure project that would take several years to complete. It would, as many in this audience know, have major implications for the way we transact with each other and, more broadly, for the financial sector and the economy in general.
“The Taskforce’s conclusion is that we are not yet at a point where a firm decision can be made to implement a digital pound. However, in view of the likely need and the lead time to the introduction, the Bank and The Treasury will now proceed to the next stage of detailed policy and technical development of the digital pound – including the development of a technical blueprint. This stage will take around two to three years, following which a decision will be made whether or not to proceed to the next stage and implement a digital pound in the UK.”
Bank Heads Scandal
On Tuesday, members of parliament accused the presidents of the four major banks in the United Kingdom of not passing on to depositors in the United Kingdom the benefits of increased interest rates. The discrepancy between the amount of interest that is paid out on deposits and the amount of money that is earned from loans and other assets has increased as a result of rising interest rates.
At the moment, the majority of easy-access savings accounts provide interest rates that are lower than one percent, and these accounts are offered by huge high-street lenders. Dame Andrea Leadsom, a former minister and current Conservative member of parliament for South Northampton, questioned whether or whether the lenders had depended on their clients to prevent them from switching to better terms.
In response, Matt Hammerstein, chief executive officer of Barclays Bank UK, mentioned that the market for savings products is lacking in comparison to the market for mortgages in terms of the amount of industry assistance available to customers.
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